20.12.18

The Number Of Companies That Shut Down In Nigeria In Just 3 Years Will Shock You

The Nigerian Chambers of Commerce has said that less than 800
companies closed shop in Nigeria between 2009 and 2011, due to the harsh
operating business environment.

The companies that have survived are also having serious challenges as more than half of them have been classified as “ailing.’’

According to the News Agency of Nigeria, NAN, this was disclosed by
the President of Nigerian Association of Chambers of Commerce,
Industry, Mines and Agriculture, NACCIMA, Herbert Ajayi, on Tuesday, in
Asaba, in a paper he presented at a zonal workshop on economic
diversification organised by the Revenue Mobilisation Allocation and
Fiscal Commission, RMAFC.

Mr. Ajay said the current situation of the “surviving” industries
poses a great threat to the survival of the manufacturing industry. He
added that capacity utilisation in industries hovers around 30 per cent
and 45 per cent on the average, with 100 per cent overhead costs.

He blamed the continued decline in the manufacturing sectors on
“political and economic factors’’, citing poor infrastructure and
epileptic power supply as key impediments to the industry.

“The manufacturing industry as a whole operates on more than 70
per cent of energy it generates, using generators; and operating these
generators greatly increases the cost of manufacturing goods,’’ he said.

The industrialist gave other reasons for the woes in the sector as
incessant increase in the price of petroleum products used by
industries, multiple taxation, unabated smuggling and inadequate access
to finance, both local and abroad.

He said widespread insecurity and the inability of government
agencies in the ports to meet their 24-hour target, for cargo clearance,
have contributed to the dwindling fortunes in the manufacturing sector.

The NACCIMA president, whose speech was delivered by the Vice
President of the association, Mary Iyasere, described current government
policies to revive the manufacturing industry as inadequate.

“For instance, in May 2010, the government announced a 1.3
billion-dollar fund to help banks extend credit to the manufacturing
sector following the decline in available finance after the global
economic crisis had set in.

“Notwithstanding this positive development arising from the
reform process, the Nigerian economy, especially the manufacturing
sector is still confronted by serious challenges, structural imbalance
and lack of diversification,” he said.

“The current government policies targeted at the real sector
(manufacturing) are also inadequate and preventing the manufacturing
industry from flourishing,”he added.

On the way forward, Mr. Ajayi stressed the need for the organised
private sector to support the government’s efforts to revitalise the
sector through the much-canvassed public private partnership.

He also called for more transparency in the ongoing government-led privatisation exercise of public enterprises.

Quoting statistics from the Bureau of Public Enterprises (BPE), Mr.
Ajayi said between 1999 and 2011, a total of 121 firms were privatised
or commercialised, with about N250 billion realised from their sale.

“It was also reported that 81 of the privatised firms were
operating at about 66 per cent and 41 at 34 per cent performance level,” he added.

The NACCIMA president, however, observed that the figures are in
stark contrast to the position of the Senate ad-hoc Committee on
Privatisation, which posited that 80 per cent of the firms are not
performing.

In addition, he said Nigeria can borrow from the lessons of the
economic policies of the “Asian Tigers” — Hong Kong, South Korea,
Singapore and Taiwan — to boost the manufacturing sector.

He, however, warned that Nigeria must exercise “caution” in trying
to imitate the Asian policies. He explained that government needs to
consider the peculiarities of the nation’s economy and marry it with
those of Asia in areas “where policies are applicable rather than wholesale adoption”.

“This is because the casualty between growth and
industrialisation could prove to be a costly mistake as seen in other
countries, in pushing for rapid industrialisation,’’ Mr. Ajayi stated.